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There are lots of reasons for being unemployed. A majority of people are unemployed abruptly. They may have been let go or laid off with no warning. This is why it’s recommended you have an emergency fund equal to three months of expenses saved up. That way if the unavoidable happens, you have a backup plan. Plenty of folks don’t always have those expenses saved up and if they do, they could very well find themselves unemployed longer than those 3 months. Or even experience more hardship that depletes their funds quickly. This changes how we need to manage our finances when we become unemployed. Here are our top tricks on what you can do to help you manage your money and hopefully stay afloat.
Reconfigure Your Expenses
Now is a great time to pare down your expenses so that you are spending less. Look around and see how you are spending and what areas can deal with a paring down. Groceries are everyone’s go-to to cut down but we encourage you to make that your last area of concern. You want to lower your utilities, insurances, and subscriptions before you start looking at your groceries. If you have a top of the line cell service with all the bells and whistles, how about dropping some services to lower that bill for a while? If you have a cell phone and a landline, it’s time to get rid of one of those (we recommend ditching the landline!) Perhaps you can use mass transit rather than drive, carpool, or find other ways to minimize your driving and fuel usage.
Apply for Unemployment
While you are looking for new employment, take the time to apply for unemployment benefits. Each state determines their own eligibility requirements so it’s important to get to know what your state requires. Now is not the time to listen to your friends’ advice. NJ unemployment will vary from FL unemployment and a variety of other states. Go straight to the source to get reliable help! Be aware that it takes time to receive benefits; it’s not as quick as you think it may be. Go to that office as soon as you are let go from your position!
Talk to Creditors
Making payments to creditors will feel like a major crunch at this time and that is normal. No matter what your situation is, the very first thing you should do is talk to them about the situation and see if you have any options open to you. You may be able to refinance your vehicle to lower the payment or freeze your credit card accounts. You may be able to score lower payments during the duration of your unemployment or for a short period of time. Your creditors want you to be able to pay your bills so they are often willing to work with you. Understand that they will give higher priority to people with a record of timely payments and often those with a good credit score. It never hurts to ask so even if you think they may say no, just check.
Don’t Use Credit
This may be the time that you think the credit cards will help you but the reality is, it can send you further into debt. Credit lines should only be used in a dire emergency at this time, such as a medical emergency. If you use credit lines to maintain your lifestyle you will max them out faster than you can get employment. Cut your costs, don’t add to them.
Being unemployed is difficult but you can overcome it. Being careful is your best friend! If you find yourself in a major bind, ask friends and family for a bit of help. Most times they are the ones who will step up and help us out when we need it most.
See my disclaimer.